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Should You Invest in the SPDR S&P Biotech ETF (XBI)?
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If you're interested in broad exposure to the Healthcare - Biotech segment of the equity market, look no further than the SPDR S&P Biotech ETF (XBI - Free Report) , a passively managed exchange traded fund launched on 01/31/2006.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Biotech is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $5.97 billion, making it one of the largest ETFs attempting to match the performance of the Healthcare - Biotech segment of the equity market. XBI seeks to match the performance of the S&P Biotechnology Select Industry Index before fees and expenses.
The S&P Biotechnology Select Industry Index represents the biotechnology sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Biotech Index is a modified equal weight index.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector--about 100% of the portfolio.
Looking at individual holdings, Arena Pharmaceuticals Inc. accounts for about 1.88% of total assets, followed by Biocryst Pharmaceuticals Inc. (BCRX - Free Report) and Exelixis Inc. (EXEL - Free Report) .
The top 10 holdings account for about 12.48% of total assets under management.
Performance and Risk
The ETF has lost about -33.43% and is down about -43.07% so far this year and in the past one year (as of 05/04/2022), respectively. XBI has traded between $73.83 and $138.68 during this last 52-week period.
The ETF has a beta of 1.20 and standard deviation of 35.59% for the trailing three-year period, making it a high risk choice in the space. With about 191 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Biotech ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XBI is a great option for investors seeking exposure to the Health Care ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
First Trust NYSE Arca Biotechnology ETF (FBT - Free Report) tracks NYSE Arca Biotechnology Index and the iShares Biotechnology ETF (IBB - Free Report) tracks Nasdaq Biotechnology Index. First Trust NYSE Arca Biotechnology ETF has $1.35 billion in assets, iShares Biotechnology ETF has $7.66 billion. FBT has an expense ratio of 0.55% and IBB charges 0.45%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should You Invest in the SPDR S&P Biotech ETF (XBI)?
If you're interested in broad exposure to the Healthcare - Biotech segment of the equity market, look no further than the SPDR S&P Biotech ETF (XBI - Free Report) , a passively managed exchange traded fund launched on 01/31/2006.
Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.
Additionally, sector ETFs offer convenient ways to gain low risk and diversified exposure to a broad group of companies in particular sectors. Healthcare - Biotech is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 9, placing it in bottom 44%.
Index Details
The fund is sponsored by State Street Global Advisors. It has amassed assets over $5.97 billion, making it one of the largest ETFs attempting to match the performance of the Healthcare - Biotech segment of the equity market. XBI seeks to match the performance of the S&P Biotechnology Select Industry Index before fees and expenses.
The S&P Biotechnology Select Industry Index represents the biotechnology sub-industry portion of the S&P Total Markets Index. The S&P TMI tracks all the U.S. common stocks listed on the NYSE, AMEX, NASDAQ National Market and NASDAQ Small Cap exchanges. The Biotech Index is a modified equal weight index.
Costs
Cost is an important factor in selecting the right ETF, and cheaper funds can significantly outperform their more expensive counterparts if all other fundamentals are the same.
Annual operating expenses for this ETF are 0.35%, making it one of the least expensive products in the space.
Sector Exposure and Top Holdings
Even though ETFs offer diversified exposure that minimizes single stock risk, investors should also look at the actual holdings inside the fund. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation in the Healthcare sector--about 100% of the portfolio.
Looking at individual holdings, Arena Pharmaceuticals Inc. accounts for about 1.88% of total assets, followed by Biocryst Pharmaceuticals Inc. (BCRX - Free Report) and Exelixis Inc. (EXEL - Free Report) .
The top 10 holdings account for about 12.48% of total assets under management.
Performance and Risk
The ETF has lost about -33.43% and is down about -43.07% so far this year and in the past one year (as of 05/04/2022), respectively. XBI has traded between $73.83 and $138.68 during this last 52-week period.
The ETF has a beta of 1.20 and standard deviation of 35.59% for the trailing three-year period, making it a high risk choice in the space. With about 191 holdings, it effectively diversifies company-specific risk.
Alternatives
SPDR S&P Biotech ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, XBI is a great option for investors seeking exposure to the Health Care ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.
First Trust NYSE Arca Biotechnology ETF (FBT - Free Report) tracks NYSE Arca Biotechnology Index and the iShares Biotechnology ETF (IBB - Free Report) tracks Nasdaq Biotechnology Index. First Trust NYSE Arca Biotechnology ETF has $1.35 billion in assets, iShares Biotechnology ETF has $7.66 billion. FBT has an expense ratio of 0.55% and IBB charges 0.45%.
Bottom Line
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.